After months of waging a legal war with its landlord, Orianna Health Systems, once the operator of more than 40 nursing homes, won final court approval of its chapter 11 plan last week. Now, lawyers for the nursing home operator say that its extremely litigious bankruptcy case could help provide similarly situated companies with a road map when their options for leaving bankruptcy suddenly dry up, WSJ Pro Bankruptcy reported. The fate of Orianna’s chapter 11 plan hinged largely on Rule 3019 of the Bankruptcy Code. The rule allows for modifications of a chapter 11 plan before confirmation, so long as a judge finds the modifications don’t adversely affect creditors. Without out it, bankrupt companies could have to resolicit votes from creditors every time they make small, technical changes to a plan, which are common in large chapter 11 cases. “This has always been there, but I think it’s been a little used and little understood part of the bankruptcy code,” said Thomas Califano, a lawyer for Orianna. Orianna sought chapter 11 protection in March, citing “numerous financial challenges” that have affected the broader health-care sector, including rising medical costs and falling reimbursement payments from government insurance programs.
